TMI Blog2007 (5) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... ssels of Coast Guard, Naval Dock and ONGC at Mazagaon Docks Ltd. During the period 16-7-2001 to 30-9- 2003, the appellants did such job under contract with their customers for a value of Rs. 12.93 crores approximately. They were issued a show cause notice dated 23-1-2004 alleging that the said services undertaken by the appellants are Port Services which are liable to Service tax. The appellants took a categorical stand before the lower authorities that the services rendered by them for repairing of the vessels, under a contract with their customers cannot be treated as Port Services and hence are not liable to service tax. However, the authorities below by referring to the Board's Circular No. 67/16/2003-ST, dated 10-11-2003 and also by referring to the various provisions of Major Port Trust Act and Finance Act, 1994, held against the appellants and confirmed the demand as also imposed penalty. 3. Shri V. Sridharan, ld. Advocate arguing on behalf of the appellants has submitted that Clause 67 of the Finance Act, 1994 refers to Port Service as any service rendered by a port or any person authorized by such port, in any manner, in relation to a vessel or goods . Port h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;, be set aside and appeal allowed. 5. Countering the arguments, Ld. DR draws our attention to Section 35 of the Major Port Trust Act, 1963, wherein power of Board to execute works and provide appliances etc. has been detailed. As per sub-section 2(1), the Board has to provide for dry dock to carry out repairs or overhauling of the vessels. As such, submits the Ld. DR that this is a job, which the Board can itself perform, or authorize other person to perform. Since the appellants has been authorized to do so, he steps into the shoes of the Board and as such, the services rendered by him has to be treated as port services rendered by any person authorized by the port and thus liable to service tax. 6. In his rejoinder, Ld. Advocate Shri Sridharan submits that the said section only provides the power of the Board to provide appliances, which include providing of dry docks which y itself for further carrying out the repair activities, which cannot be equated with the activity itself. 7. After considering the submissions by both the sides, we find that the disputed issue revolves around the interpretation of Port Services as appearing in Section 65(67) of the Finance Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and for conveying, receiving and storing goods landed, or to be shipped or otherwise; (c) moorings and cranes, scales and all other necessary means and appliances for loading and unloading vessels; (d) reclaiming, excavating, enclosing and raising any part of the foreshore of the port or port approaches which may be necessary for the execution of the works authorized by this Act, or otherwise for the purposes of this Act; (e) such breakwaters and other works as may be expedient for the protection of the port; (f) dredgers and other machines for cleaning, deepening and improving any portion of the port or port approaches or of the foreshore of the port or port approaches; (g) lighthouses, lightships, beacons, buoys, pilot boats and other appliances necessary for the safe navigation of the port and of the port approaches; (h) vessels, tags or other boats for use within the limits of the port or beyond those limits, whether in territorial waters or otherwise, for the purpose of towing and rendering assistance to any vessel, whether entering or leaving the port or bound elsewhere, and for the purpose of saving or protecting life or property and for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the service or services and shall give a receipt in such form as the Board may specify. (3) Notwithstanding anything contained in this Section, the Board may, with the previous sanction of the Central Government, authorize any person to perform any of the services mentioned in sub-section (1) on such terms and conditions as may be agreed upon. (3A) Without prejudice to the provisions of sub-section (3), a Board may, with the previous approval of the Central Government, enter into any agreement or other arrangement, whether by way of partnership, joint venture or in any other manner with, any body corporate or any other person to perform any of the services and functions assigned to the Board under this Act on such terms and conditions as may be agreed upon. (4) No person authorized under sub-section (3) shall charge or re cover for such service any sum in excess of the amount specified by the Authority, by notification in the Official Gazette. (5) Any such person shall, if so required by the owner, perform in respect of goods any of the said services and for that purpose take charge of the goods and give a receipt in such form as the Board may specify. (6) The re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he net of Port Service means any service rendered by a port or any person authorized by such port. As such, the services which can be taxed under the said category have to be either services rendered by port itself or any person authorized by such port. Admittedly, repair of the vessel is not being done by the port. The lower authority has held the appellant to be a person authorized by such port to undertake the activity of repairing of vessel. 9. The appellant is admittedly a partnership firm carrying on a business of all types of marine repairs for which purpose they are given a repair contract involving supply of material, steel removal job, fabrication, refitting, and over hauling of machinery, from the principle contractor like Mazagaon Docks Ltd. etc. For such purposes, they have been given vendor registration. They also receive direct contract of repair from foreign ship owners or through their steamer agent 10. Revenue has placed reliance upon Section 35 of the Major Port Trust Act, 1963, which defines power of the Board to execute the work sub clause (1) to Clause 2 of the said Section stands invoked by Revenue in the impugned order. The said clause is to the effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above contention of learned advocate. Where group of words followed by a general expression, the subsequent general expression has to derive its meaning from the previous expression Admittedly, piloting, hauling, mooring, remooring, hooking, or measuring of vessels are activities which are directly connected with the entry or exit of the vessel from port area. As such, the subsequent expression appearing in the said clause has to be held as covering the services which are in relation to the movement of the vessel and has to be understood and construed by applying the principle of ejusdem g-eneris. We may, at this stage, borrow the observations made by Hon'ble Supreme Court in case of Sidhdheshwari Cotton Mills (P) Ltd. v. U01 reported in 1989 (39) E.L.T. 498 (S.C.) = 1989 2 SCC 458, reproduced hereunder: 12. The expression ejusdem generis - 'of the same kind or nature' - signifies a principle of construction whereby words in a statute which are otherwise wide but are associated in the text with more limited words are, by implication, given a restricted operation and are limited to matters of the same class or genus as preceding them. If a list or string or family of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Supreme Court, it has to be held that expression or any other services in respect of 'vessels has to be extended to the services which are connected with the movement of the vessel. It is nobody's case that repairing of vessel in the dry docks is connected with the movement of vessel. As such, the Revenue's reliance on the above provisions do not advance the case. 14. We also find a force in the appellant's argument that sub-section of Section 42 provides for authorization by the Board for the various services at the rate specified by that port in the Official Gazette. This has reflected upon the fact that various services, which can be authorized by the Board to any other person are routine services for which various rates can be fixed in advance. As far as the repairing of vessel is concerned, the charges would definitely depend upon the extent of work required to be done. We are informed that such consideration depends upon the contract arrived at after much negotiations. This fact leads us to hold that such contract services of repair of vessel cannot be held to be port services . 15. During the course of arguments, it was also contended by R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law that such activity would not be included under the expression 'port services', we hold that above circular issued by Board is not in accordance with the law. 18. We also note that the demand stands confirmed against the appellant by invoking the extended period of limitation. The period involved is 16-7-01 to 30-9-03, whereas the SCN has been issued on 23-1-04. There are no positive allegation of suppression or any mis-statement on the part of appellant with an intention to evade the duty. The issue involved is bona fide interpretation of pro visions of law. The appellants have reflected their entire activity on the statutory document required to be maintained by them in the ordinary course of their business. As such, we are of the view that there was enough reason for the appellant to entertain a bona fide belief that the services rendered by them are not covered by the port services and that they were not liable to pay duty. As such, in the absence of any positive act on the part of appellant, to suppress any relevant information from the Department, we are of the view that extended period of limitation is not available to for the Revenue. The demand is also, acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
